We don’t judge; we build bridges

Tax magnifierThe Fair Tax Mark’s Meesha Nehru on what the Fair Tax Mark is really about

What we do is build trust between businesses and consumers through improved communication and accountability.

Our role is to help companies provide enough information to explain their tax arrangements clearly so that anyone can understand them and make informed decisions based on what they’ve read.

Of course, the actual tax the company pays is important, but not as important, we believe, as the honesty and the choices governing how they behave on the issue.

To expand on this a bit more:

1. We democratise tax to get people involved in the debate

Tax affects us all. In a democracy we should all have a say on how it works. Currently, however, in the area of corporate taxation, most people cannot get involved in debates at anything more than the most basic level as they do not have the tools to do so. Information is carefully wrapped up in jargon, technical complexities and hidden from public view. No wonder certain companies have got away with so much for so long.

We at the Fair Tax Mark want to change this situation by making tax easier to understand and bringing the decisions that companies make about it out into the open. By getting companies to fully explain their tax policies in their public material, and to back this up with the figures and jargon free notes that prove they are being true to their word, we are giving companies the opportunity to clarify their positions and giving people the chance to learn more about the many different factors affecting their choices.

In an ideal world we’d be so successful at changing the way companies communicate about tax that people would make their own informed decisions independently and we would lose our reason to exist. In reality, however, we know that most people do not have the time to pore over annual accounts before deciding where to spend money, so we offer them the Fair Tax Mark as a short cut to decision-making (backed up with full explanations on what the label means).

As many in the tax and accountancy profession are keen to point out, tax is complex and goes flying over the head of most mere mortals. That is why successful public figures such as Chris Moyles and Jimmy Carr can claim ignorance about their tax misdemeanours and point the finger instead at those clever chaps with letters after their names who advised them.

Let’s be honest, understanding all the vagaries of the tax system in one country, let alone working out how to find the best deal by routing money through several nation-states, is not an easy task. Moreover, for most people outside of the tax professions, even starting a discussion on these issues is a sure-fire way of killing a conversation and seeing eyes glaze over.

But actually it doesn’t have to be that way and perhaps it ought not be. Whether we like it or not, tax is going play a important role in our future. In fact, it will be crucial as humanity faces many important challenges over the coming decades.

2. We ask for clear, objective communication backed up with figures

It’s all well and good that we ask for more information, I hear you say, but what makes our models of tax communication better than the others that exist out there already?

We think there are three reasons why.

Firstly, our model for tax reporting is designed with the lay person in mind. We encourage companies to communicate in a straightforward and honest way that does not hide behind partial information or misleading technical terms.

Secondly, we check that the numbers and the written explanation of a company’s tax affairs match up. It is absolutely no good if a company publishes an extra 3000 words about its tax position, as one famous British mobile telecoms provider recently did, if those words are not backed up with a full numerical breakdown of where the money is made and how the tax charge is calculated.

Thirdly, we are completely independent. We are also accountable to anyone who cares to challenge us because we are fully open about our process and methods of working. This makes us different from the private boards that determine the current rules about how companies report their finances and who are dominated by the large accountancy firms.

It also makes us different from the transparency initiatives generated by business and the professions. We are, however, lucky enough to be able to count on top professionals as our advisors, they all work with us in a voluntary and personal capacity with nothing to gain or lose from doing so.

3. We emphasise choice

At the heart of many of the corporate tax abuse scandals we have seen, is choice. Companies can either choose to exploit the legal ambiguities or they can choose to take responsible decisions and pay back into the places where they undertake the bulk of their economic activity.

Choice is also at the heart of the Fair Tax Mark. Companies that we accredit come to us. They are choosing to become more transparent about their tax. These are the companies that are more likely to be making responsible choices about tax internally and we are unrepentant in our desire to reward them for this with a Mark.

Citizens and consumers also have choices to make. We believe that when people decide to spend their money they should be given different options – not just over what product they want to buy, but over what business model they want to support in the process of doing so. The Fair Tax Mark adds to the factors that may influence that choice. People can take it into consideration or choose to ignore it if they wish.

4. Our critics

The vast majority of our loudest opponents come from those who have the most to lose if people become more informed about tax.

Some within the tax and accountancy professions are clearly worried that if consumers can start to make their own educated decisions based on transparent tax reporting they may not choose to buy from the companies those professions advise. As a result, those professionals may start losing their lucrative fees.

That said, we know what we’ve created isn’t perfect and that there are specific technical details in our Criteria that will change and evolve as we grow as an organisation and learn from our experiences working alongside partner businesses. However, we will endeavour to always be as honest and open as possible about how we arrive at our conclusions and we’re always happy to listen to and take on constructive feedback.

5. Consumer choice

Until then we’ll let you choose whether you will listen to those who would rather companies took decisions behind closed doors and that you didn’t meddle with what you don’t understand, or whether you want to add your voice to the debate. Ultimately its the difference between being kept in the dark and the power of making informed decisions. We are putting our faith in the latter.